How is a hard money loan paid back.

[Jerry Cima]

You get a hard money investor willing to loan you $125k at 10% for a 1 year term & origination fee of 1%. Doesn't that mean that within the first month you need to pony up 1.25k for the origination fee & about 8.8k for the first "mortgage" payment? Then another $8.8k every month after that till the repairs are done & you get the home refinanced by a conventional lender?

[Kyle J.]

Originally posted by @Jason D.:

@Jerry Cima hard money loans are almost all interest only payments, not a 1 year term loan. So you'll just pay the interest until you refinance and pay the loan back.

The 1 year term just means it has to be paid back within 1 year, not that it will be fully amortized or anything in that 1 year. (Think of it as a loan due date.)

One year term loans are fairly common for hard money since most people are in and out of them fairly quickly, either through selling the property or a refi into conventional.